Question

In case there is no partnership deed between the partners, then at what rate interest on capital will be provided?

• A. 8 % p.a
• B. 6% p.a
• C. 12% p.a
• D. No interest on capital will be provided.

Hint:

Without a partnership deed, capital gets no interest by default. Only a partner's loan gets 6% p.a.

Answer 1

The Correct Option is D

Step 1: What is being tested:
The question asks about the default position under partnership law when partners have not agreed anything in writing.

Step 2: Reasoning:
Interest on capital is a charge against profit. It is meant for partners who put in more capital. Such a charge changes how profit is split, so the law lets it apply only if all partners have agreed to it in the deed.
No deed means no agreement, so no interest on capital.

Step 3: Compare with loan:
A partner who lends money to the firm beyond his capital gets 6% p.a. interest by default. That is the only default interest rate. Capital has none.
So the 6% figure in option (2) is a trap.

Final Answer:
No interest on capital. \[ \boxed{\text{Option 4}} \]